Penns Woods Bancorp(US:PWOD)2023-11-14 20:29Financial Performance - Net income for the three months ended September 30, 2023 was $2.2 million, a decrease from $5.3 million in the same period of 2022, while net income for the nine months was $11.1 million compared to $12.9 million in 2022[129]. - Basic earnings per share for the three months ended September 30, 2023 were $0.31, down from $0.74 in 2022, and for the nine months, it was $1.56 compared to $1.83 in 2022[134]. - Core earnings for the three months ended September 30, 2023 were $2.3 million, down from $5.4 million in 2022, and for the nine months, it was $11.2 million compared to $13.2 million in 2022[129]. - Total non-interest income for the three months ended September 30, 2023, decreased by $208,000 compared to the same period in 2022, with a notable decline in loan broker commissions by 44.98%[161]. - Total non-interest income decreased by $478,000, or 7.21%, from $6,632,000 in September 30, 2022 to $6,154,000 in September 30, 2023[163]. Interest Income and Expense - Interest and dividend income increased by $7.1 million (41.85%) for the three months and $19.4 million (41.78%) for the nine months ended September 30, 2023 compared to the same periods in 2022[135][138]. - Interest expense surged by $9.3 million (694.97%) for the three months and $20.6 million (502.84%) for the nine months ended September 30, 2023 compared to the same periods in 2022[139][140]. - Total interest income for Q3 2023 was $23.9 million, up from $16.9 million in Q3 2022, while total interest expense rose to $10.6 million from $1.3 million in the same period[148]. - The net interest income on a fully taxable equivalent basis for Q3 2023 was $13.5 million, down from $15.7 million in Q3 2022[148]. - Net interest income decreased by $2,219,000 for the three months ended September 30, 2023, compared to the same period in 2022, primarily due to a decrease in volume and rate changes[149]. Asset and Loan Portfolio - The increase in loan portfolio income was attributed to a higher average loan portfolio balance and an increase in the average rate earned on the portfolio[135]. - The average loan portfolio balance increased by $276.8 million for Q3 2023 and $278.2 million for the nine months ended September 30, 2023, with an increase in average yield of 87 bps and 76 bps respectively[142]. - Gross loans increased by $178,730,000, or 10.90%, from $1,639,731,000 at December 31, 2022 to $1,818,461,000 at September 30, 2023, driven by increases in residential and commercial real estate mortgages and consumer automobile loans[170]. - The total interest-earning assets increased by $7,038,000 for the three months ended September 30, 2023, compared to the same period in 2022[149]. Credit Losses and Nonperforming Loans - The provision for credit losses increased by $517,000 for the three months ended September 30, 2023, while it decreased by $1.1 million for the nine months due to a recovery on a commercial loan[129]. - The provision for credit losses for the three months ended September 30, 2023, was $1,372,000, an increase from $855,000 in the same period of 2022, attributed to loan portfolio growth[155]. - Nonperforming loans decreased to $3,683,000 at September 30, 2023, down from $4,890,000 at December 31, 2022, indicating a reduction in the nonperforming loans ratio to 0.20%[156]. - The ratio of nonperforming loans to total loans decreased from 0.37% at September 30, 2022, to 0.20% at September 30, 2023[156]. Deposits and Borrowings - Total deposits decreased by $10,807,000 from $40,333,000 at December 31, 2022 to $35,590,000 at September 30, 2023, while time deposits increased by $111,601,000[179]. - Demand deposits decreased by $47,556,000 (9.16%) from $519,063,000 to $471,507,000, while NOW accounts saw a significant decline of $151,844,000 (40.76%) from $372,574,000 to $220,730,000[180]. - Total borrowed funds increased by 60.62%, or $155,259,000, reaching $411,391,000 as of September 30, 2023, compared to $256,132,000 at December 31, 2022[181]. - Long-term FHLB borrowings rose by $115,000,000 (121.05%) from $95,000,000 to $210,000,000, indicating a strategic move to lock in interest rates[183]. Capital and Liquidity - Common Equity Tier I Capital ratio was 9.505% as of September 30, 2023, down from 9.973% on December 31, 2022, while Total Capital ratio decreased from 10.925% to 10.290%[190]. - The Company maintained a Common Equity Tier I Capital of $173,291,000 for risk-weighted assets as of September 30, 2023, compared to $165,346,000 at the end of 2022[190]. - The net loans to total deposits ratio was 115% as of September 30, 2023, indicating a focus on maintaining liquidity while managing interest rate risk[193]. - Management believes the Company has sufficient liquidity to satisfy estimated short-term and long-term funding needs[197]. Interest Rate Sensitivity - The Company aims to maintain a capital level sufficient to support existing assets and anticipated growth, ensuring favorable access to capital markets[186]. - The Company’s asset/liability management policy includes a market value at risk calculation to monitor the effects of interest rate changes on shareholders' equity[200]. - Interest rate sensitivity is assessed through a simulation analysis, with no substantial changes in the Company's gap analysis compared to the previous year[207]. - Management emphasizes that movements in interest rates affect financial condition more significantly than changes in inflation rates[206].